VAUGHAN, Ont. — Cara Operations Limited will acquire a majority ownership in Original Joe’s Franchise Group Inc. for $93 million — $90 million of which will be used by Original Joe’s to re-acquire its trademarks and royalty rights from Diversified Royalty Corp (DIV).
Original Joe’s currently franchises and operates 99 full-service restaurants within Canada and the U.S. under three brands — Original Joe’s Restaurant & Bar, State & Main Kitchen Bar and Elephant & Castle Pub and Restaurant.
“The decision to unwind our royalty relationship with Diversified was difficult, however, the opportunity to partner with Cara was attractive from a strategic and synergistic perspective,” says Derek Doke, president and CEO of Original Joe’s. “We are pleased to come to terms with both Cara and Diversified on an arrangement that serves all three parties’ interests.”
The transaction will be accretive to Cara on an EPS basis and allows Original Joe’s to retain approximately $12.6 million in annual royalty payments, currently paid to DIV. The Original Joe’s head office will remain in Calgary, along with its existing management team.
“With its proven restaurant-pub concepts and its understanding of the casual, full-service foodservice space, Original Joe’s is a natural fit for Cara,” says Bill Gregson, CEO of Cara. “The majority of Original Joe’s restaurants are located in Western Canada — an area where Cara is currently under-represented. With our acquisition of Quebec-based St-Hubert soon to close, Cara’s business and restaurant network will now have greater geographic distribution across all of Canada.”
The transaction is aimed to close in late 2016.